We are reiterating our "Outperform" recommendation on
Superior Industries International Inc.
). The company continues to benefit from a wide customer base along
with long-term business agreements with clients which ensures
financial stability. Together with the strategic acquisitions,
competent management and production efficiencies, the company is
also reaping the benefits from the global expansion of the
Superior Industries witnessed a 17% year-over-year decline in
net income in the first quarter of 2012. Earnings declined to 25
cents per share from 29 cents in the same quarter last year. The
results, however, surpassed the Zacks Consensus Estimate by 6
Revenues in the quarter hiked 7% year-over-year to $202.5
million, exceeding the Zacks Consensus Estimate of $193 million.
Increase in sales volume led the company to operate at full
capacity in order to fulfill the customers' demand.
Superior Industries, which competes with
).,is the largest manufacturer of aluminum wheels for passenger
cars and light-duty vehicles in North America. The company offers a
wide range of products in accordance with the recent market trends.
Besides, aluminum wheels are more in demand compared to steel owing
to its light weight. Currently, 65% of total vehicles and 70% of
trucks use aluminum wheels.
Gradual improvements of the automotive industry will have
favorable impacts on Superior Industries. The company is expanding
its trade with international customers and also mulling for further
development in the emerging markets.
A wide customer base covering almost all the important car
manufacturing companies adds immensely to the company's
performance. Long-term contracts with the customers also protect it
adequately from instability and uncertainty.
However, Superior Industries is under threat due to customer
General Motors Company
Ford Motor Co.
) and Chrysler contributed about 76% to the company's wheel sales
in 2011. Ford Motor, General Motors and Chrysler accounted for 35%,
30% and 11%, respectively, to total sales in 2011. In addition, the
company faces competition with respect to price, technology,
product quality, delivery and overall customer service which
thwarts its future growth plan.
Our long-term recommendation is backed by a Zacks #2 Rank, which
translates into a short-term (1 to 3 months) "Buy" rating.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
MERITOR INC (MTOR): Free Stock Analysis Report
SUPERIOR INDS (SUP): Free Stock Analysis Report
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